Is it an advertisement? Is it a bomb? No, it's French street art

Ken Livingstone himself couldn't have choreographed a better advertisement for the capital at play: under a baking sun, hundreds gathered in central London yesterday to watch a story loosely based on the work of Jules Verne being enacted by 40ft puppets and a giant wooden elephant. "It's the Sultan's Elephant," a worker for Westminster city council said to a tourist, and looked instantly stunned that those words were his own.

If the phrase "street theatre" summons unhappy images of mime artists in Covent Garden, then the events that took place in the capital yesterday, and will continue until Sunday, showed what could be done with a large enough scale of ambition. The Sultan's Elephant, a theatrical event by the French theatre company Royal de Luxe, is to street art what a glacier is to ice cubes.

This wasn't theatre, said the director, Jean-Luc Courcoult, but "meteorology," and he backed up the grandness of his claims with a spectacle that has been five years in the making. His intended theme was "intimacy," but he said it was up to the crowds to make what they would of his work. And they did. For two days the sight of the elephant had been provoking small acts of self-revelation and actual smiles in the traditionally suicidal-looking London pedestrians.

Things began to happen on Thursday morning when commuters rounding the corner at Waterloo Place encountered what looked like a huge wooden torpedo embedded in the asphalt, smoke pouring from it. "Is it advertising?" asked a passerby. "It's a bomb," said an American tourist, while a South African teenager said doubtfully, "If this was real there'd be Swat teams all round it."

There was no branding, no signposts and no merchandising. There were no tickets, either, and thus no revenue; the project has been almost entirely funded by the Arts Council. In an age when even the Notting Hill carnival is plastered with sponsors' logos, The Sultan's Elephant offered a rare thing in modern life: a bit of mystery. By Thursday lunch-time, the shifting crowds were still unsure of what it was.

"Has it come down from the sky?" said a Japanese tourist to Dawn Adams, who works around the corner in St James' Square.

"No," she said. "I don't think so. But there's a big elephant down the road."

"I don't understand, what's the point?" said a young man who, if the weather had been cooler, would almost certainly have been wearing a hoodie.

"Media attraction, innit," said his friend, who turned to a well-to-do woman and asked politely what the score was. "It's moveable art," she said, and the boy frowned. "I thought it was a rocket."

"I'm a gecko," said the woman's child. "Can we go to McDonald's?"

"No darling. We're doing something cultural."

In the way of all fairy tales it was left to a small boy to interpret Mr Courcoult's idea most succinctly and, with pitch perfect surrealism, to run around the base of the rocket shrieking, "somebody pinch my nose!" His mother said, "honey, don't put your hand in the hole," and a yellow-vested council officer muttered about health and safety. "I argued for a barrier," she said. But there were no rules here.

By Friday lunchtime a crane had appeared alongside the time machine, to lift off the lid, and a large crowd gathered. People in Carlton House Terrace pressed against the upper windows and office workers massed on the roofs of Pall Mall. Builders from a nearby construction site looked on and assumed instant authority on the subject of giant wooden time machines. "That's been dug up, mate," said one, "no question. There's seven tons of material there," while in front of him two men in suits discussed the price of polyurethane. At 2pm a live band played soft French rock and men in footmen's livery climbed the gantry and lifted the lid on the rocket.

Speculation about what was inside had ranged from a giraffe to "a Frenchman" to the sultan himself, but it was a 40ft wooden girl in a green dress who was eventually hoisted out of the barrel. She wore old-fashioned aviator spectacles.

The crowd stared, open-mouthed, while the footmen swarmed over her like Lilliputians and, working the wires, got her to take off her helmet. Then she set off down Regent Street, taking the back route to Horse Guards Parade. No one had the faintest idea what any of it meant, but it didn't much matter: as the puppet and the elephant met up on the concourse, imaginative musings broke out all over the crowd.

"Do you think it'll spray water?" a girl asked a policewoman.

"It might do," she said. "I would."

"If there's a serious point," said Nicky Webb, one of the British organisers with partner company Artichoke, "it's that with the Olympics coming this shows that London can be a joined up city, that all agencies can work together."

The event took so long to organise because shutting down the Mall and parts of Regent Street takes, as Ms Webb put it with pained understatement, "some doing". But the council had been marvellous, she said.

When the elephant sprayed water and made trumpeting sounds, the crowd cheered. Julian, a young hedge-fund manager who wouldn't give his surname because he had bunked off work, said: "If this is coming out of my council tax, I don't mind. Exactly the kind of thing we should be spending it on."

And - is there any higher compliment to be paid to an artist? - he looked thoroughly surprised at himself.